Weekly Grain Update – December 5, 2017

Soybean Influences

The market is becoming very concerned about the weather in Argentina.  Brazil was plagued with wet weather several weeks ago, but that situation has improved.  Argentina is dry, and the market is adding risk premium due to this situation.  The world is counting on a large bean harvest from Argentina.  If this dry weather continues, the world bean carryout could be cut quite significantly.  However, it is early in their growing season, and there is time for the situation to improve.  Friday was the first day of the month and the funds decided to buy bean futures and add to their existing long bean position.  On Monday, they continued to buy bean futures and pushed beans higher through the day.  It is normal for beans to rally during the Thanksgiving holiday, so the strength in beans was not unexpected.

It is interesting to see that even though beans and wheat rallied significantly on Monday, corn could do very little amongst the strength in the other grains.  Corn is still being weighed down by the huge carryover of roughly 2.5 B Bu.  In addition, corn is struggling to rally as there are a huge amount of farmer sell orders just above the market.  Any attempt for corn to rally and these orders squash any rally attempt.  The farmer generally sold his beans for cash flow at harvest, but is storing his corn in any where possible.  Our US corn exports are also struggling to keep pace, and it is very likely that the USDA will need to lower corn exports by approximately 100 M bu on the next Monthly Crop Report on December 12.  If this happens, we could see corn carryout be raised by this same amount to nearly 2.6 B Bu, a truly huge amount of excess corn.

As I look at the charts tonight, March corn futures are trading in a sideways pattern with support at the $3.48 level and resistance at $3.60 level.  For those of you who must sell corn nearby, I would place targets around the $3.55 to $3.60 level vs March corn futures.

Beans are moving in an upwards channel as it rallies.  January bean futures closed at $9.98 tonight, which is right in the middle of the upwards channel.  Support is currently at the $9.70 level with resistance at the $10.10 level vs January bean futures.  For those of you who need to sell beans, I would place targets at the $10.00 to $10.10 level vs January futures.  With this recent run up in the bean market, I encourage all of you to seriously start looking at forward contracting Oct / Nov ’18 beans for fall delivery.  Currently, new beans can be locked in around $9.35 cash price and if you start selling at this point, I recommend placing a target each 20 cents higher and reward the market on rallies.  This is a strategy that really works well over time, and it will protect your farm.

CHS ProAdvantage

This is the LAST CALL for our CHS ProAdvantage  Contracts. All growers need to try at least one contract to diversify your marketing strategies.  It is a great tool, and has worked well.  Below is a description:

This contract is a very simple approach to allowing our trading professionals at CHS to market your grain for you.  Basically, you will hand over a portion of your grain to them to squeeze as much money out of the market as they can.  They will do many trades behind the scenes to generate as much profit for you as possible and when the program is over, their profits will be added together and given back to you in the form of a price that should be higher than the prevailing price at that time.  You don’t have to worry about the trades that they do, or any complex marketing strategies to learn.  This is easy folks.  Just give them a portion of next year’s grain production, and allow our marketing professionals to make money for you.

This contract has been offered for 3 years and the results are quite remarkable.  Their bean contract has worked well, and has allowed participants to enjoy contracts that were significantly higher than the current market.  All of this goes directly to your bottom line.  For bushels in your bin, you can enroll in a contract for July 2018 delivery.  For next year’s production, you can enroll in a Fall of 2018 delivery, and we also have Fall of 2019 delivery contracts as well.  The cost is 10 cents per bushel for the July 2018 or Fall 2018 contracts, and 12 cents per bushel for the Fall 2019 contracts.  The Fall 2019 is an especially good deal because the contract allows our traders an additional year to make trading returns on your behalf for only 2 additional cents.  Also, the 2 year contract has worked tremendously well over its history.  There is no minimum bushel quantity required.  Please click here for more information on our CHS ProAdvantage contract.  Every grower in the area should take advantage of this contract on at least a portion of next year’s production.  It is a very good contract that has a long history of success.  If you have other questions, please call me at Readfield.  Enrollment ends December 8th, 2017.

As always, if I can help you with anything, please call me at Readfield.

Marcus

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